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  • Dhruva Advisors – Views on MSMEs, Ease of doing Business, REITs / InvITs, HNI & Family offices

    Published on February 2, 2023

    ·         Views on MSMEs by Dinesh Kanabar, CEO, Dhruva Advisors

    Apparently, payments to MSME will be allowed only on payment basis. Hence one will need to track all dealings with MSME and track payments

    ·         Views on Ease of doing business by Dinesh Kanabar, CEO, Dhruva Advisors

    The fact that we have had to reduce 39000 compliances just shows how many compliances we have had to live with and why we have still a long way to go on Ease of Doing Business!!

    ·         Views on REITs / InvITs by Ajay Rotti, Partner, Dhruva Advisors

    REITs / InvITs are mandatorily required to distribute their cash surplus upto certain limits as per SEBI regulations on a quarterly basis. The distributions generally consists of interest, dividend or repayment of debt. The law provides for a pass through status or single stage taxation of the receipts. The receipts are either taxed in the hands of the Trust or the unit holders. Not both. However, repayment of debt was not taxable in the hands of both. This double non-taxation has been addressed.  From April 1, 2023 all distribution by a REIT/InvIT representing repayment of debt is taxable as “other income” in the hands of the unit holders.

    ·         Views on Impact of the budget on HNIs & family offices by Vaibhav Gupta, Partner, Dhruva Advisors

    At an overall level, the Budget is quite positive for the HNIs due to the reduction in the highest income tax rate from 42.74% to 39%.  This would see increased adoption of the new tax regime for individuals.  Particularly, the high income bracket founders and professionals will save taxes on their ESOPs.  On the other hand, there are a few negative announcements which will impact HNIs and family offices such as the taxability of market linked debentures as short term capital gains and taxation of proceeds of high premium insurance policies.  A very significant change is on limiting the exemption provided for capital gains upon purchase of new residential property. If proceeds received from offers for sale by selling shareholders in an IPO are invested in purchasing residential property beyond INR 10 cr, then the capital gains exemption will be available only in proportion that INR 10 cr bears to the total proceeds of the share sale. 


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